Electric car company that received a $529M federal loan recalls vehicles

An electric vehicle manufacturer that received a $529 million loan from the Energy Department is recalling 239 vehicles.

The Transportation Department’s National Highway Traffic Safety Administration (NHTSA) said Thursday that the company, Fisker Automotive, will recall its Karma vehicles made between July 1, 2011, and Nov. 3, 2011, because of a faulty electric battery component that could cause a fire. 


“Within the high-voltage battery, certain hose clamps may have been positioned incorrectly during assembly. If positioned incorrectly, the batter compartment cover could interfere with the hose clamps, potentially causing a coolant leak from the cooling hose,” NHTSA said in its recall notice Thursday.

“If coolant enters the battery compartment, an electrical short could occur possibly resulting in a fire.”

The Energy Department issued a $529 million loan to Fisker in April 2010 for the development of its plug-in electric vehicles.

The administration has come under fire for issuing the loan after ABC News reported in October that Fisker is making its vehicles in Finland because it could not find a contractor in America to manufacture them.

But the Energy Department has countered that the loan was intended to help Fisker develop the vehicles, which the company did in the United States.

The Energy Department said in October that the loan was used to develop manufacturing processes for the Karma, at the company’s U.S. facilities.

The department also said the larger portion of the loan — $359 million — was supporting production of Fisker’s Nina vehicles, and that Fisker used this funding to bring a shuttered General Motors plant in Delaware back to life. That plant employs 2,500 people, according to the Energy Department.

The news comes after Republicans have pummeled the Obama administration for issuing a $535 million loan guarantee in 2009 to the now-bankrupt California solar panel manufacturer Solyndra.

House Republicans have said they intend to broaden the scope of their ongoing Solyndra investigation to include other companies that have received backing from the administration, including Fisker.